House Republican lawmakers are signaling that legislation to regulate proxy advisory firms likely will be introduced this year.
Rep. French Hill (R-Ark.) Feb. 28 told Bloomberg BNA that the House Financial Services Committee will take a closer look at the role of proxy advisers in the coming months.
Meanwhile, Rep. Sean Duffy (R-Wis.), speaking at a U.S. Chamber of Commerce event earlier this year, said the latest version of the Financial Choice Act—legislation to roll back the Dodd-Frank Act that is expected in the coming weeks—will include provisions intended to increase oversight and transparency of the proxy advisory industry.
Proxy advisers are paid by pension funds and other large investors to conduct research and help them vote on issues in the thousands of corporate annual meetings that occur annually.
Do they need more regulation? It depends on whom you ask.
Business groups, including the U.S. Chamber of Commerce, have long called for more oversight. They say two firms in particular—Institutional Shareholder Services Inc. and Glass Lewis & Co.—wield an inordinate amount of influence over institutional investor voting. They also say there is a lack of accountability for inaccurate information and inadequate disclosure of conflicts of interest.
ISS and Glass Lewis representatives, on the other hand, say their firms provide a valuable service by doing the research so that their clients can focus on decision-making. They also previously said that alleged factual errors may be more a matter of interpreting what constitutes “long term,” “performance-based” and other issues than real mistakes.
In any case, the legislation, when introduced, is likely to require the firms to register with the SEC. To be eligible for registration, the firms would have to disclose the procedures and methodologies they use to develop voting recommendations, and any potential or actual conflicts arising from their provision of advisory services. Those measures were included in a bill (H.R. 5311) Duffy introduced in May 2016, which was folded into the previous version of the Choice Act.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)